⁂ Why Germany is urging “humility” on us, and a Yes vote to Lisbon

Last week the German Ambassador said that a second No vote to Lisbon would have “horrific consequences” for Ireland.

On Tuesday the German Social Democrat spokesman on European affairs said that any economic assistance to Ireland would require “greater humility” from Dublin, a renewed commitment to the EU from Irish voters in a Lisbon Two referendum, and a better appreciation of “the common German and Irish interest” in continuing European integration.

Why this German anxiety over Lisbon?

One obvious reason is that the Lisbon Treaty would hugely advantage Germany, the EU’s largest Member State, by moving EU law-making to a primarily population basis and abolishing the weighted vote system for making EC/EU laws that has existed since the 1957 Rome Treaty.

By basing EU law-making primarily on population size, Lisbon would double Germany’s voting weight on the EU Council of Ministers from its present 8% under the Nice Treaty rules to 17%. France’s vote would go from 8% to 13%, Britain’s and Italy’s from their current 8% to 12% each, while Ireland’s voting weight would be halved from 2% to 0.8% (Art.16 TEU).

Under the present Nice Treaty arrangements Germany, France, Britain and Italy have 29 votes each in making EU laws and Ireland has 7 votes. An EU law requires 255 votes out of 345 and at least half the Member States have to vote in favour to make up those 255 votes. A “blocking minority” is 91 votes: that is, 345 minus 255 plus 1.

By contrast, under Lisbon a new European law would require the support of 55% of the Member States, i.e.15 out of 27, so long as the 15 make up 65% of the aggregate EU population. Germany has four times Ireland’s voting weight now: 29 votes as against 7. By basing votes on population size Lisbon would thereby give Germany 20 times Ireland’s voting weight, with its 82 million people as against Ireland’s 4.3.

France, Britain and Italy would each have some 15 times Ireland’s voting weight on a population basis, compared to their four times now.

Germany and France between them have nearly one-third of the EU’s total population. Under the proposed Lisbon Treaty rules Germany and France would need only two other countries to vote with them to be able to block any EU law they did not like.

Giving Germany and the other Big States more of a say in EU law-making is what German Ambassador Christian Pauls really means when he says Lisbon would make the EU more “efficient”!

If Lisbon goes through and gives Germany and the other Big States such an increase in their power, how long – realistically speaking – do people think Ireland’s 12.5% corporation tax rate would last, as compared to Germany’s 30%?

How long would it be before the EU imposes its own income tax, sales tax or property tax on us – which would be permitted for the first time under Lisbon’s Article 311 TFEU and which Germany and France are likely to push for once the Council of Ministers would obtain the legal power ?

In the European Parliament when Ireland joined the EEC in 1973, Germany had 36 seats as against 10 for Ireland – 3.6 times as much. Under Lisbon, Germany would have 96 MEPs as against 12 for Ireland – 8 times as much.

The political reality is that there is now a race on in time between the ratification of Lisbon, which would greatly increase the powers of Germany, France and the Brussels Commission in the EU, and the advent to office of a Conservative Government in Britain by spring next year at the latest.

Conservative policy is to hold a referendum on Lisbon in the UK and recommend a No vote to it to the British people – so long as we Irish are not bullied and bamboozled into reversing our No vote before then, thereby bringing Lisbon into force for all 27 EU States before Mr Gordon Brown’s Government loses office.

By standing by last year’s No to Lisbon, we would thereby be opening the way to enabling our fellow countrymen and women in Northern Ireland to have a vote also on this important Treaty.

- Anthony Coughlan, Director

*Lisbon: mandatory tax harmonisation

The Lisbon Treaty amendment on EU harmonized taxes which has not been publicly mentioned so far in Ireland’s referendum debate

Article  2.79 of the Lisbon Treaty would insert a six-word amendment -”and to avoid distorton of competition” – into the Article of the existing European Treaties dealing with harmonising indirect taxes – Article 113. The full amended Article would then read as follows:
Article 113
“The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition.”
(The Lisbon Treaty amendment is underlined) . . .Treaty on the Functioning of the European Union

The significance of this short but important amendment is that it would enable the European Court of Justice, which adjudicates on competition matters, to decide that Ireland’s 12.5% rate of company tax, or Estonia’s zero rate,  as against Britain’s 28% rate and Germany’s 30% is a distortion of competition which breaches the Treaty Articles dealing with the internal market – Art. 26 and Arts.101-9 TFEU -  in relation to which qualified majority voting on the Council of Ministers applies.

The Irish Government’s veto under Article 113 would be irrelevant if those Articles on the Internal Market are invoked as the legal basis for proposing changes in EU tax laws.  All the assurances regarding unanimity underArticle 113 would then count for nothing.
Once this amendment to Article 113 is inserted, the European Commission, whose job it is to police the internal market, need only point out that the  big  cross-national disparities in  corporation tax rates and Ireland’s reluctance to accept a Common Consolidated Tax base which would tax company profits on the basis of their sales in different EU countries, at the tax rates prevailing in those countries, constitute a prima facie “distortion of competition” under Articles 101-109.
If Ireland refused to cooperate with what the Commission wanted, the Commission could bring it before the Court of Justice – or another country or firm could institute proceedings against it – and the Court could declare the Irish Government’s tax policy to be  unlawful as in breach of the EU’s Internal Market provisions.
Unanimity under Article 113 would certainly  be required to introduce any joint rates of company tax, but this Lisbon Treaty amendment would give the EU Commission and Court of Justice ample extra powers to erode Ireland’s low rate of corporation profits tax, whether we liked it or not.
If an Irish-based company had 10% of its sales or turnover in Ireland and 90% in, say, Britain, its profits from its Irish sales could be taxed at 12.5% and from its British sales at 28%, under the scheme the Commission has been mooting.  We might even  be allowed to keep our 12.5%  company tax indefinitely, but its practical benefit would be hugely eroded by proposals such as this, which this six-word  Lisbon Treaty amendment is designed to facilitate.
There is no other possible reason for inserting this hitherto virtually unnoticed  six-word amendment by means of the Lisbon Treaty.

Ireland’s 12.5% company tax rate, not to mind Estonia’s zero rate, just stand out as being clearly “distortions of competition” on the EU’s Internal Market.
Commission  President J.M. Barroso should be asked what is the significance of this six-word Lisbon Treaty  amendment  to Article 113 on harmonised taxes during his two-day visit to Ireland.
By refusing to ratify the Lisbon Treaty and agree to this important amendment we  refuse to hand over to the EU Commission and Court of Justice these new mechanisms to undermine the principal incentive attracting foreign companies to Ireland and keeping many of them in th country.  It should be noted of  course  that Ireland’s low corporation tax rate benefits Iindigenous companies also, and not just foreign multinationals here.
By rejecting Lisbon and insisting on a Protocol in any new Treaty which would protect the principle of tax-competition between the countrries, we  make a stand for economic freedom and reject the attempt to impose an economic straitjacket on the EU Member States in the interests of Germany, France and Britain, with their high company tax rates.
Note, incidentally, that harmonizing laws on indirect taxes in the EU is mandatory under Article 113 set out above: “The  Council SHALL…”
Anthony Coughlan
Secretary
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